Fertility Options and Female Labor Market Outcomes: Evidence from Universal Two-Child Policy in China

This paper examines the effect of fertility policy relaxations on female labor market outcomes, using evidence from the Universal Two-Child Policy in China and data from China Family Panel Studies (CFPS). We use event study and difference-in-differences methods to quantify the causal relationship between the Universal Two-Child Policy and women’s employment status and income. As previous fertility policy relaxations already allowed couples where at least one partner is a single-child to have two children, we identify single-child women who are of reproductive ages 20 to 50 as the control group and women of the same ages who have siblings as the treatment group. We find that the Universal Two-Child Policy had statistically insignificant effect on the employment status of women who have siblings. However, compared with the control group, the average wages of the treatment group were lower, as the income of women who have siblings increased at a much slower rate than the income of single-child women.